YouTube Will Fund Their Own Original Content Channels With $100 Million

According to the Wall Street Journal, YouTube is in the midst of a major overhaul that is aimed at positioning the site as a leading content provider for the Internet television age. The company will dramatically alter their home page to feature professional content–and will pump as much as $100 Million into funding original professional video content to populate as many as 20 new channels.

YouTube’s New Professional Content Plan

You might remember the rumor a few weeks ago that YouTube was looking to pay celebrities $5 Million to create original content for a customized channel. And while there’s no concrete word in today’s announcement regarding that specific rumor, it’s pretty obvious they’re related in some way. It could be that the tipster from a few weeks ago got some details wrong… or it could be that celebrity channels are part of this new restructuring plan. It’s also possible the two initiatives are unrelated, but both serving the greater overall push at YouTube for improved content.

From the Journal article:

The talks are more likely to yield deals with production companies or directors than with individual movie stars or other celebrities, said the people familiar with the matter. Some of the channels may contain content hand-picked by certain “tastemakers” who could attract a following.

For nearly a year now YouTube has been pumping money into their Partner Program, offering contests, grants, cash prizes, and educational opportunities like the Creator Institute and Next Up. They’ve made no bones about the fact that they’re trying to improve the overall level of quality in the videos found on their site. And maybe the company has just realized that the learning curve for amateurs is too large to wait it out and that might be why they’re going after professionally produced content in a much bigger way.

The Journal also has a nice video piece up to compliment their written coverage:

Why Is YouTube Interested In Making Their Own Content?

This kind of move serves two important goals:

1. Getting viewers to watch more minutes per day on YouTube. Again, the company’s been pretty transparent about their intentions regarding the total amount of video consumed by the average viewer — they’d like to jump from 15 minutes per viewer per day to several hours.

2. Positioning YouTube as a leading content provider for the coming Internet TV revolution. As web-connected TVs continue to appear on the market, more and more consumers are using their televisions to consume movies, television shows, and videos through a variety of ways. And Google TV has encountered several roadblocks in the form of studios and production companies who have blocked their online content from the device.

If you can’t beat ’em, join ’em… right? By creating their own original professional content, YouTube is hoping to circumvent the production companies altogether. Who needs the rights to television shows when content of similar quality and entertainment value can be found on YouTube? At least… I think that’s the premise they’re operating under. That would make this an incredibly long-term plan simply because it’s going to take years for the transition to Internet TV to complete, and even more years for consumers to begin seeing YouTube original content as being equal in quality to the sitcoms and dramas they’ve gotten so regularly from the stalwart production companies and networks.

But still, Internet TV is coming. The entertainment video landscape (TV, movies, etc.) is going to shift dramatically over the next five to ten years (whether they like it or not), and there’s absolutely no reason to believe a website can’t be a top producer of popular video content in the not-too-distant future.

Of course, both the goals listed above are really subsets of the true root goal: selling more advertising. YouTube is now a true child of Google, in that revenue is based on ads. And whatever YouTube is in five years, it’ll still be operating on an advertising-revenue model. So they need more viewers and they need those viewers to stick around longer and longer so that they’ll have maximum engagement as a lure for advertisers.

What Does It All Mean?

I talked about this a lot when we discussed the “celebrity channels” rumor a few weeks back, but I don’t think this is any reason for the amateur creators and YouTube Partners to panic. I don’t think YouTube will ever turn their backs on the users that built the community into what it is. And I don’t think viewers are going to abandon Annoying Orange or Mystery Guitar Man just because there are professionally-produced videos being funded by YouTube.

Again, YouTube’s goal is to get not only new viewers but to get existing viewers watching more overall content. They don’t want to pull views from their Partner channels they’re already making lots of money from those creators. Besides, I’m one who happens to believe that a lot of Partner channel content already fits the definition of “professionally-produced video.”

The rumored home page redesign is the only reason to worry, in my mind. It’s possible, though unlikely, that YouTube’s focus on these new original-content channels might result in favorable placement and promotion to a degree where existing Partners suffer. But it’s also possible, from the sound of it, that some of the most popular Partner channels of today will be picked as featured channels tomorrow, depending on the extent of these “tastemakers” they’re talking about.

All in all, it’s important to remember that this is just the first step in what will be a gigantic and long process. I know $100 Million is a ton of money, and I don’t mean to dismiss it too quickly, but in the grand scheme of things – in YouTube terms – $100 Million is just a drop in the bucket. This is, after all, the site that cheerily lost millions a day while they patiently built up a revenue model. I’d go so far as to say we’re going to see much larger expenditures on content in the future than this initial seed fund.

For the viewers, it’s all roses. We should expect better content and the ability to find better content more easily. And we can look to a near future when Google TV devices are much more useful than they currently are.

Remember, we scoffed when Fox created their own television network, and their initial lineup included mostly crude, attention-getting shows. They now have some of the highest rated shows in history (American Idol, anyone?). Similarly, we laughed when cable networks like AMC and FX decided to create their own content, and now shows from those networks routinely win critical acclaim. There’s no reason at all to think YouTube can’t develop top-quality programming on their own, and if the Wall Street Journal’s sources are to be believed… that’s exactly what they’re doing.

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Jeremy Scott is the founder of The Viral Orchard, an Internet marketing firm offering content writing and development services, viral marketing consulting, and SEO services. Jeremy writes constantly, loves online video, and enjoys helping small businesses succeed in any way he can.